What's The Acqui-Hire Model?
By Sebastian Amieva
Hey Legend!
The acqui-hire model is a type of acquisition in which a company buys another company primarily for the purpose of acquiring its employees or intellectual property. This is often done when the acquiring company is looking to bring in specialized talent or technology that the acquired company possesses, but is not interested in continuing to operate the business itself.
The acqui-hire model can be an attractive option for the acquired company, as it allows the employees to continue working and potentially receive a financial payout as part of the acquisition. However, it can also result in the acquired company's operations being shut down or significantly scaled back, as the acquiring company may not have a need for the business itself.
Here are a few examples of companies that have used the acqui-hire model:
Google: In 2013, Google acquired Nest Labs, a maker of smart thermostats and smoke detectors, for $3.2 billion. Although Nest's products were a key part of the deal, it was widely reported that Google was primarily interested in acquiring the company's talent and technology.
Facebook: In 2014, Facebook acquired Oculus VR, a virtual reality technology company, for $2 billion. While Oculus' virtual reality technology was a key part of the deal, it was reported that Facebook was also interested in acquiring the company's talented team of engineers.
Amazon: In 2018, Amazon acquired PillPack, a online pharmacy, for $753 million. While PillPack's technology and customer base were key assets in the deal, it was reported that Amazon was also interested in acquiring the company's talented team of software engineers and pharmacists.
Microsoft: In 2015, Microsoft acquired Xamarin, a mobile development platform, for an undisclosed sum. While Xamarin's technology was a key part of the deal, it was reported that Microsoft was also interested in acquiring the company's talented team of developers.
The acqui-hire strategy can be attractive for a number of reasons. Here are a few potential benefits of using the acqui-hire model:
Access to specialized talent: By acquiring a company primarily for its employees, the acquiring company can bring in specialized talent or expertise that it may not have access to otherwise.
Speed and efficiency: Acquiring a company and its employees can be a quicker and more efficient way to access new technology or talent, compared to trying to build it in-house or hiring individual employees.
Cost savings: Acquiring a company and its employees can be more cost-effective than trying to hire and train a new team from scratch.
Cultural fit: By acquiring a company and its employees, the acquiring company can also bring in a team that is already aligned with its culture and values.
That being said, the acqui-hire strategy is not without risks. It can be disruptive to the acquired company's operations and may result in the loss of jobs or the closure of the business. Additionally, the acquiring company may not fully realize the benefits of the acquisition if it is not able to effectively integrate the acquired team and technology into its operations.
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Sebastian Amieva
Founder
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